February 7, 2019 / 10:15 AM / 14 days ago

CEE MARKETS-Currencies hit multi-week lows as central banks meet

    * Crown sets 6-week low, zloty 4-week, forint 3-week 
    * Czech, Romanian, Serbian central banks seen holding fire
    * Romanian central bank may warn government over tax -
analyst

    By Sandor Peto
    BUDAPEST, Feb 7 (Reuters) - Central European currencies set
multi-week lows as three of the region's central banks which
meet on Thursday were seen keeping rates on hold, while the
dollar extended its gains.
    Dollar buying often weighs on these currencies which have
also been weakened by weak economic data from the region and the
euro zone, and soft comments from local central bankers.
    After the Polish central bank kept rates on hold on
Wednesday, the Czech, Romanian and Serbian banks looked likely
to follow suit on Thursday.
    The crown touched its weakest levels against the
euro since Dec. 28. It traded at 25.82 at 0900 GMT, down 0.2
percent.
    Its decline steepened on Monday after the Czech Republic
reported a surprise annual fall in industrial output in
December. It extended its loss on Tuesday after Czech Finance
Minister Alena Schillerova projected spending cuts as slowing
growth could cut state revenues.
    A Reuters poll of analysts earlier this week still projected
the crown could strengthen to 25.165 against the euro over the
coming year.
    The Czech National Bank (CNB) pays increasing attention to
weak economic data from the world and particularly Germany, and
expectations in Czech money markets have shifted to stability
from higher rates, KBC analysts said in a note.
    "That is one of the reasons why the CZK should not react to
the outcome of the CNB's meeting strongly," they said.
    The forint's market has also priced out expectations for
short-term monetary tightening by the Hungarian central bank.
    The forint, easing 0.2 percent, touched a 3-week
low even though Hungary's volatile industrial output data showed
5.4 percent annual growth in December, almost twice as fast as
expected. 
    The zloty eased to 4-week highs, after Polish
central bank Governor Adam Glapinski said on Wednesday that he
saw no need to change record-low interest rates this year and,
most likely, next, as inflation remains in check.
    "The dovish stance (of the bank)... will limit any upside
for the Polish zloty over the coming months," Fitch Solutions
Macro Research said in a note.
    The Romanian central bank (NBR) has not been worried over
inflation either.
    Its comments will be still watched closely on Thursday as a
new tax on bank assets including government bonds, linked to
interbank interest rates, have caused jitters in Romanian
markets.
     "We wouldn't exclude a stern warning from NBR for the
government which ironically can bear positive impact for
long-end ROMGBs (bonds)," Raiffeisen analyst Gintaras Shlizhyus
said in a note.
    The leu was flat at 4.7395 versus the euro.     
            CEE       SNAPSHOT   AT                         
            MARKETS             1000 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.8200   25.7810    -0.15%    -0.44%
 crown      >                                       
 Hungary    <EURHUF=  319.2500  318.6000    -0.20%    +0.57%
 forint     >                                       
 Polish     <EURPLN=    4.2985    4.2966    -0.04%    -0.21%
 zloty      >                                       
 Romanian   <EURRON=    4.7395    4.7400    +0.01%    -1.80%
 leu        >                                       
 Croatian   <EURHRK=    7.4120    7.4155    +0.05%    -0.03%
 kuna       >                                       
 Serbian    <EURRSD=  118.4500  118.4000    -0.04%    -0.13%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1064.85  1063.020    +0.17%    +7.94%
                                       0            
 Budapest             40434.58  40597.26    -0.40%    +3.31%
 Warsaw                2402.43   2414.41    -0.50%    +5.53%
 Bucharest             7502.64   7442.73    +0.80%    +1.61%
 Ljubljana  <.SBITOP    829.63    831.44    -0.22%    +3.15%
            >                                       
 Zagreb                1766.89   1766.10    +0.04%    +1.03%
 Belgrade   <.BELEX1    704.24    704.24    +0.00%    -7.54%
            5>                                      
 Sofia                  574.39    574.25    +0.02%    -3.38%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.8720    0.0970   +243bps    +10bps
            R>                                      
   5-year   <CZ5YT=R    1.5890   -0.1180   +192bps    -12bps
            R>                                      
   10-year  <CZ10YT=    1.7290    0.0020   +157bps     +0bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5310   -0.0080   +209bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.1770   -0.0040   +251bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.7510    0.0070   +259bps     +1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.08      2.11      2.13      2.00
            <PRIBOR=                                
            >                                       
 Hungary                  0.34      0.55      0.72      0.15
                                                    
 Poland                   1.74      1.73      1.73      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Reporting by Sandor Peto;
Editing by Andrew Cawthorne)
  
 
 
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